It would be bad precedent, and mind-bogglingly expensive, to promise to pick up all future obligations to major creditors. At the same time, any remarks that threaten to leave creditors hanging could panic the markets. So silence reigns, the Fed and Mr. Geithner receive bad publicity over the bailouts, and we are all laying the groundwork for a future financial crisis.

Moral hazard caused this mess; the administration’s answer is . . . more moral hazard! Those who originated bad loans knew that they wouldn’t bear any losses. Instead, those were supposed to fall further up the chain. Fannie, Freddie and financial intermediaries such as AIG, would (supposedly) absorb the risk. In the case of Fannie and Freddie, the government indemnification was widely relied upon, if officially denied. Now we’re in the process of creating the same sort of moral hazard for the entire financial sector (and, for that matter, the automobile industry). Bet big! Gambling losses won’t be collected.

It’s fashionable to portray those who are in favor of free markets as solicitous of “greed.” But defending the right of those who take risks to profit has an essential corollary — insisting that those who lose their wagers make good on their losses. Part of one’s risk is in the choice of one’s counterparties. Right now, it’s the Obama administration that’s playing the role of the worst sort of apologist for Wall Street and big business.

But under the Geithner-Summers plan the loan is precisely designed to be a one-way bet, for the purpose of overpricing the toxic asset in order to bail out the bank’s shareholders at hidden cost to the taxpayers.

It’s one thing to spend hundreds of billions bailing out bank management, stockholders and bondholders. It’s another thing entirely to give away even more to politically-connected investment firms just to disguise the fact that you’re holding the banks harmless for their foolishness.